May 18, 2023

Bankruptcy vs Short Sale: Which One is the Best Option in Missouri?

As a Missouri resident, you may be facing financial difficulties and wondering whether bankruptcy or a short sale is the best option for you. Both options have pros and cons, and it's important to understand them before making a decision.

In this article, we'll explore the differences between bankruptcy and short sale, the benefits and drawbacks of each, and what to consider before making a choice.

Bankruptcy in Missouri

Bankruptcy is a legal process that helps individuals or businesses who are unable to pay their debts by either reorganizing their finances or discharging their debts. There are two types of bankruptcy available to individuals: Chapter 7 and Chapter 13.

Pros and Cons of Bankruptcy

One of the main benefits of bankruptcy is that it can wipe out most of your unsecured debts, such as credit card debt and medical bills. It also provides an automatic stay on collection actions, which means that creditors cannot continue to pursue you for payment while the bankruptcy is pending.

However, filing for bankruptcy can have a negative impact on your credit score and stay on your credit report for up to ten years. It can also be a complex and time-consuming process, and you may have to give up some of your assets to pay off your creditors.

Short Sale in Missouri

A short sale, on the other hand, is a real estate transaction where the homeowner sells their property for less than what they owe on their mortgage. The lender agrees to accept the sale price as full payment, and the homeowner avoids foreclosure.

Pros and Cons of Short Sale

A short sale can be a good option if you're facing foreclosure and want to avoid the negative consequences that come with it. It can also help you get out of a property that you can no longer afford, and the lender may forgive the difference between the sale price and what you owe.

However, a short sale can also have a negative impact on your credit score, although not as severe as a foreclosure. You may also have to pay taxes on the forgiven debt, and the process can be lengthy and complicated.

What to Consider When Choosing Between Bankruptcy vs. Short Sale

Before deciding whether bankruptcy or a short sale is the best option for you, there are several things to consider.

  • Evaluate your financial situation and determine whether you can afford to keep your home or not. If you can't, a short sale may be the best option.
  • Consider the impact that each option will have on your credit score and future financial goals. If you plan to buy a house or car in the near future, bankruptcy may not be the best choice as it can make it harder to get approved for credit.

Selling Your House to Avoid Bankruptcy

If you're considering bankruptcy but want to avoid the negative impact it can have on your credit score, selling your house for cash may be a good option. A cash home sale is a quick and easy way to sell your property without having to deal with real estate agents or mortgage lenders.

Benefits of a Cash Home Sale

There are several advantages of a cash home sale that can help you avoid bankruptcy.

  • One of the main benefits of a cash home sale is that you can get a fair price for your property without having to pay any commissions or fees.
  • You also don't have to worry about making repairs or staging your home for showings.
  • Another benefit is that you can close the sale quickly, often in as little as a week. This can be especially beneficial if you're facing financial difficulties and need to sell your home quickly to avoid bankruptcy.

While a short sale may be a good option if you're facing foreclosure, a cash home sale may be a better choice if you want to avoid bankruptcy and the negative impact it can have on your credit score. With a cash home sale, you can sell your property quickly and get a fair price without having to deal with real estate agents or mortgage lenders.

How Missouri Laws Affect Your Decision

It's important to understand how Missouri laws affect your decision to file for bankruptcy or sell your house for cash. Missouri is a non-judicial foreclosure state, which means that lenders don't have to go to court to foreclose on your property. However, Missouri also has homestead exemptions that can protect your home from creditors in certain situations.

Sell My House Fast in St. Louis, Missouri

If you need to sell your house fast but don’t want the hassle of a traditional home sale, contact Paramount Realty Group. We buy houses as-is. No repairs are needed. Avoid closing costs and realtor commissions. Close in as little as seven days. Call 314-472-8937 to get cash for your home from our local home buyers in Missouri.

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